1-Year Medicare 'Doc Fix' Looks to Avoid 'Fiscal Cliff'

July 24, 2012

July 24, 2012 — A bill introduced by Rep. Michael Burgess, MD (R-TX), gives Congress a quick-and-dirty option for averting a 27% cut in Medicare pay for physicians in January by — in lawmaker parlance — kicking the can down the road for another year.

Of the 3 bills floated so far this year to deal with the Medicare reimbursement crisis, the legislation from Dr. Burgess appears to be the most passable. His so-called "doc fix," introduced July 18, would freeze Medicare rates at their current level through 2013, thereby postponing the cut until January 1, 2014.

In contrast, a more ambitious bipartisan bill introduced in May would scrap the sustainable growth rate (SGR) formula that Medicare uses to set physician pay, phase out fee-for-service reimbursement, and replace it with a system that rewards physicians for high-quality, low-cost care. However, the high price tag of the bill, called the Medicare Physician Payment Innovation Act of 2012, makes passage unlikely in a hyperpartisan election year.

The Congressional Budget Office recently reported that eliminating the SGR formula and merely freezing Medicare rates for 10 years would cost $316 billion during that period. This figure essentially represents debt that Congress has put on the books by postponing physician pay cuts going back to 2003.

The sponsors of the Medicare Physician Payment Innovation Act of 2012 propose paying off SGR debt with future savings from the military pull-out from Iraq and Afghanistan, an idea that some House Republicans view as a budget gimmick.

A doc fix bill from Sen. Rand Paul, MD (R-KY), also would eliminate the SGR formula and give physicians Medicare annual raises equal to increases in the Consumer Price Index, up to 3%. Dr. Paul proposes to offset the cost of his bill, which he puts at $440 billion, by repealing Medicaid expansion and premium subsidy payments under the Affordable Care Act (ACA). This bill also has dim prospects because Democrats who control the Senate have vowed to protect the ACA from wholesale gutting.

In an interview with Medscape Medical News, Dr. Burgess said that his bill, titled Assuring Medicare Stability and Access for Seniors Act of 2012, will cost roughly $20 billion. It does not offer any "pay for" to make it budget neutral, but Dr. Burgess said that a deficit-reduction bill passed by the House in May and now awaiting Senate action would free up more than enough money to fund his doc fix.

Kicking the Can Before Reaching the Fiscal Cliff

Dr. Burgess introduced his legislation with the goal of passing it before the November general election. Otherwise, the effort to stave off a 27% pay cut — and a possible mass exodus by physicians from the Medicare program — could take a back seat to a set of more pressing budget issues facing Congress at the end of 2012 collectively called "the fiscal cliff":

  • the expiration of tax cuts enacted during the George W. Bush administration,

  • $1.2 trillion in automatic spending cuts mandated by last year's debt-ceiling deal, and

  • the need to raise the debt ceiling again.

"Sometime between Thanksgiving and Christmas, we're going to be running around with our hair on fire," said Dr. Burgess, referring to the lame-duck session after the November election. "Why not do [the doc fix] now as opposed to December? It would be an easy lift. It wouldn't consume a lot of time. There's no need to give doctors all the anxiety about the doc fix not getting done. The poor doctors don't know how to plan their lives."

Dr. Burgess, who chairs the Congressional Health Care Caucus, said he would prefer that Congress enact a permanent doc fix as soon as possible. However, the 2 other SGR bills now in the legislative hopper are unlikely to go anywhere this year, if for no other reason than that they require more study, he said. Senate Majority Leader Harry Reid (D-NV) and President Barack Obama, he noted, would block Dr. Paul's bill because it pays for a repeal of the SGR formula with ACA cuts.

"It won't get off the deck," said Dr. Burgess.


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